How Much Car Insurance Do You Really Need?

How Much Car Insurance Do You Really Need

We spend a lot of time talking about life insurance and health insurance, but what about auto insurance?

If your teenager accidentally pushes it through the garage door, who's going to pay for the repairs to that “converted” SUV? Or what if your uncle forgets to park his car and gets into the neighbor’s new convertible? Would you be covered or have an angry neighbor and financial mess on your hands?

Whether you are driving a nice car or an older model, you need to make sure that you are covered in case life chooses to beat you. . . or your car. To protect yourself, it's important to know what types of insurance work, how car insurance works, and how much car insurance you really need.

But before we talk about the difference between basic, advanced, and premium auto insurance options and which ones are right for you, let's take a look at some basic insurance terms.

The Truth: Auto Insurance Terms Explained
Deductible
The deductible is the part of the loss that you must pay before your coverage begins. Let's say you have a fender and the repair costs $2,500. If your deductible is $500, you only have to pay $500 for this repair. The insurance covers the remaining $2,000.

Do you have the right auto insurance coverage? You could save hundreds!

The deductibles for automobile insurance generally apply per claim. So if you have another error two months later, you will have to pay your deductible again. But for the most part, $ 500 is a steal compared to what you might have out of your pocket.

However, if you have a $1,000 deductible and only need $750 in repairs, you will be responsible for the full amount as the cost of the repair will not exceed your deductible.

You probably have two different deductibles in your auto insurance: one for collision and one for full coverage.

The average driver files a collision claim every 16.3 years and a comprehensive claim every 33 years. In 2018, the average collision damage was $3,574 while the average total damage was $1,833.1.

Auto insurance premium

An auto insurance premium is simply the amount you pay for your coverage. Depending on your insurance company, you can pay monthly, quarterly, semi-annually, or even annually. Auto insurance premiums can vary depending on factors such as your deductible, age, make and age of your car, your driving history, and the type of insurance you have.

Coverage limit

Your coverage can be the maximum amount of your policy that you will pay for each type of coverage. Work with your agent to make sure you have the maximum coverage. If you exceed your insurance limits, you will be responsible for the remaining costs.

Error-free and in case of error

On average there are currently 12 states with no-fault insurance laws. In these states, your auto insurance automatically pays your medical payment entitlements for you or your family up to a certain limit, whether it's your fault or not. The other 38 states are guilty states, which means that a person must be declared "responsible" for the accident and that person's insurance must pay damages for everyone involved.

Types of auto insurance coverage (basic, advanced, and premium)

First Aid

How much auto insurance do you really need to protect yourself, your passengers, and your car? Three of the most important types of auto insurance are liability, comprehensive protection, and collision protection. Think of it as the basics or reports you can't live without.

Liability insurance

While liability insurance doesn't protect you or your car, it does protect your wallet! If you are involved in an accident that is classified as "your fault", your liability insurance will cover the costs of third parties for which you are normally responsible: medical repairs or auto repairs that others may have to pay as a result of the accident.